PC Repair computer repair business plan financial plan. PC Repair is a new computer consulting, repair, and maintenance business, offering on-site diagnosis and repair to small businesses and home PC users.

PC Repair

Computer Repair Business Plan

Financial Plan

The following sections include the annual estimates for the standard set of financial tables. Detailed monthly pro-forma tables are included in the appendix.

Our financial plan calls for limited growth in the first three months, followed by much higher sales when we move and hire additional employees. These projections are based on sound market research and ratios for comparable businesses. As we grow, we will keep our operating expenses down, and maintain a positive cash balance as we repay our three-year loan.

7.1 Important Assumptions

PC Repair's customer base would fluctuate if there was a recess in the economy or other extenuating circumstances that pertain directly to consumer or industry behavior. However, given the steady increase in computer users despite the recent recession, we assume that sales forecasts are unlikely to be dramatically altered by economic events. The table below shows some of our other assumptions.

General Assumptions

Year 1

Year 2

Year 3

Plan Month

1

2

3

Current Interest Rate

7.00%

70.00%

70.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

30.00%

30.00%

30.00%

Other

0

0

0

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7.2 Break-even Analysis

Fixed costs are projected at a monthly average for the first year. This includes payroll, moving expenses and rent, purchase of a company vehicle, and other necessities like cell phones and the answering service. Variable costs (inventory used in repairing or servicing computers) are projected as well. At these levels, what we need to bring in per month to break even is shown in the table and chart below. We will reach our break-even point mid-year, although we expect sales in November and December to dip below this level because of holidays.

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7.3 Projected Profit and Loss

The table below shows our projected profit and loss. There are two lines for direct cost of sales - the second line shows projected inventory costs of fulfilling our maintenance contracts. The marketing/promotion line shows our planned advertising program expenses. Although these are aggressive, we must spend heavily in the first year in order to establish the brand recognition that will help us break in to the local market.

This table also shows our projected expense increases as we hire more employees and move into a larger rented space. Before the move, the owner will absorb expenses related to utilities. In years two and three, we have budgeted for additional expensed equipment to expand our diagnostic and repair capabilities to keep up with orders.

We are seeking a modest net profit in the first year. As our reputation grows, we will see higher revenues and net profit over the next three years.

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7.4 Projected Cash Flow

The Cash Flow chart, below, shows our projected cash position for the first year; the table following it shows highlights for the first three years. With the requested start-up funding, we will maintain a positive cash balance throughout, and repay the loan within three years.

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7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379, Computer Related Services, (NAICS 811212) are shown for comparison.

Our projected growth is much higher than the industry average; in part, this is because we are a start-up, growing sales steadily in these first three years. We are sure that our sales forecast is conservative, given the dissatisfaction among local computer users with existing options, and our planned aggressive marketing campaign.

Ratio Analysis

Year 1

Year 2

Year 3

Industry Profile

Sales Growth

0.00%

35.94%

19.02%

5.23%

Percent of Total Assets

Inventory

8.22%

8.15%

6.01%

2.79%

Other Current Assets

16.81%

12.73%

8.14%

51.19%

Total Current Assets

100.00%

100.00%

100.00%

75.09%

Long-term Assets

0.00%

0.00%

0.00%

24.91%

Total Assets

100.00%

100.00%

100.00%

100.00%

Current Liabilities

42.77%

22.49%

11.12%

31.75%

Long-term Liabilities

0.00%

0.00%

0.00%

18.48%

Total Liabilities

42.77%

22.49%

11.12%

50.23%

Net Worth

57.23%

77.51%

88.88%

49.77%

Percent of Sales

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

78.28%

78.22%

78.55%

100.00%

Selling, General & Administrative Expenses

38.70%

65.72%

64.96%

80.06%

Advertising Expenses

0.00%

0.00%

0.00%

1.23%

Profit Before Interest and Taxes

10.44%

16.28%

21.64%

1.95%

Main Ratios

Current

2.34

4.45

8.99

1.53

Quick

2.15

4.08

8.45

1.24

Total Debt to Total Assets

42.77%

22.49%

11.12%

57.27%

Pre-tax Return on Net Worth

59.02%

63.01%

63.16%

2.73%

Pre-tax Return on Assets

33.78%

48.84%

56.14%

6.39%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

6.93%

9.73%

14.69%

n.a

Return on Equity

41.32%

44.10%

44.21%

n.a

Activity Ratios

Inventory Turnover

10.25

9.88

9.33

n.a

Accounts Payable Turnover

9.67

12.17

12.17

n.a

Payment Days

27

32

28

n.a

Total Asset Turnover

3.41

3.51

2.67

n.a

Debt Ratios

Debt to Net Worth

0.75

0.29

0.13

n.a

Current Liab. to Liab.

1.00

1.00

1.00

n.a

Liquidity Ratios

Net Working Capital

$34,039

$60,898

$109,163

n.a

Interest Coverage

19.32

6.84

33.24

n.a

Additional Ratios

Assets to Sales

0.29

0.28

0.37

n.a

Current Debt/Total Assets

43%

22%

11%

n.a

Acid Test

2.15

4.08

8.45

n.a

Sales/Net Worth

5.96

4.53

3.01

n.a

Dividend Payout

0.00

0.00

0.00

n.a

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7.6 Projected Balance Sheet

The Balance Sheet shows a steadily increasing net worth over the next three years. Since we are planning to rent, and because computer technology changes so rapidly, we will have only short-term assets, such as computer equipment and furniture. This will make our net worth much more liquid than many similar businesses.

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PC Repair computer repair business plan financial plan. PC Repair is a new computer consulting, repair, and maintenance business, offering on-site diagnosis and repair to small businesses and home PC users.